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Employment

What is the future of Employment Law?

Background

The Taylor Report, released under the catchy header “Good Work”, was released to the public on 11 July 2017 following a nine month review of employment law practices in the UK.  The report, weighing in at 116 pages, is wide ranging.  In this bulletin we attempt to cut through the jargon and explain the key points to employers and the effect it may have on their businesses.

The Main Recommendations

Employment Status
For years the subject of employment status has been debated at Employment Tribunals up and down the country. The subject has been escalated to the front pages of national press with the introduction of the “gig economy” incorporating Uber, Deliveroo and other app based services.

Currently those engaged with such services have had to fight to be recognised as “workers” and not self-employed contractors. After a number of successful Employment Tribunal cases, certain individuals have been confirmed as workers and, in return, gained benefits such as National Minimum Wage and holiday pay, for example.

The Government proposes to offer a more simplified legal test for deciding employment status.  It also proposes additional protections for such individuals, including the diluting of certain legal tests such as the control factor to identify status.  Finally, the Government proposes on renaming the term workers to “dependent contractors”. 

Will it happen? Not before Brexit. At the moment we have to follow European guidance on what legal tests apply for “workers”. Once Brexit is officially implemented the Government are free to amend the law as they see fit.

Agency Workers
This proposal drew the biggest gasp from our clients. Currently agency workers have the right to opt out of the Agency Workers Regulations 2010, which provide them with the same basic working and employment conditions that they would have been entitled to had they been recruited directly by the hirer after 12 weeks of placement. In return the agency worker would enter into a permanent contract with the agency which would provide them with payment in between assignments. This came to be known as the Swedish Derogation.

The proposals from the Taylor Report would be to scrap the opt out, putting an end to the Swedish derogation. This may cause major disruption for employment agencies and will have financial repercussions for those who utilise such agencies.

In addition, the Government propose an additional measure for agency workers to be given the right to permanent employment with a hirer if they have been working for the same hirer for 12 months.  

Will it happen? Again, due to European laws, none of the above proposals can be implemented before Brexit is official. Already there have been a number of objections by employers and employment agencies throughout the UK, and any implementation of this proposal would be deeply unpopular. Given that we no longer have a majority Government it is unlikely that any bill on this topic would be passed.

Zero Hour Contracts

Despite calls from various press for zero hour contracts to be banned, such an outcome was never a reality. Throughout the UK a number of seasonal businesses rely heavily on such contracts and a “banning” of the same would be catastrophic for many industries. With approximately 905,000 people (approximately 6% of all employment contracts) currently utilising zero hour contracts, the phenomenon of zero hour contracts will not go away any time soon.

Despite the above, the Government has proposed to give some additional protection to workers who have been employed on a zero hour contract for a year or more. Under the proposals, workers will be able to ask for guaranteed working hours going forward, with such hours based on an average of what has been worked over a yet to be decided period of time.

Will it happen? The Government want to be seen to be doing something about zero hour contracts, if only to appease the media who have used it as a tool to criticise government departments as being “out of touch with the people”. I believe a bill on this matter will be passed in parliament.

Holiday Pay

What is an employment law article without mentioning holiday pay and commissions/overtime?  The Government have a number of proposals in this ever changing area, in the main to attempt to keep up with case law.

The main proposals are to put a statutory reference period in place when deciding what holiday pay should be paid to a worker/employee. At the moment most companies use a 12 week period to calculate commission/overtime in holiday pay, however the Government suggest that a 52 week reference period would be more practicable.

In a surprising addition, the Government also propose to bring back rolled up holiday pay. This, currently unlawful practice, was outlawed through European case law in 2006 and stopped employers from claiming that additional payment in an employee’s pay meant that there was no requirement to pay them during annual leave.

Will it happen? Again, not before Brexit. European law is clear on this point and is unlikely to change before we leave Europe in March 2019. Theresa May has also promised that workers rights will not be diluted because of Brexit. And we all know politicians don’t lie.

In addition to the above key points, further proposals under the Taylor Report include:

  • Reviewing National Minimum Wage for gig economy workers;

  • Changes in what is deemed to be break in continuity of service from 1 week to 1 month;

  • Section 1 Statement to be given to employees on day 1 (not within 2 months as is currently allowed);

  • Changes to the apprenticeship levy;

  • Statutory Sick pay from day 1; and

  • the right to return to work after long term sickness.

What should you be doing now?

At the moment it is a sit and wait approach.  It is likely that the majority of these proposals may never become law however.

It may be a worthwhile exercise for employment agencies and employers who utilise agency workers to calculate any liability should Swedish derogation be scrapped following Brexit.

Recommended Reading

A copy of the Good Work report can be found on the Government website here.

 

These notes have been prepared for the purpose of an article only. They should not be regarded as a substitute for taking legal advice.

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